Since China began to produce large-scale luxury cars in 2009, the local automotive market has rapidly grown to become the largest in the world, even surpassing the US in terms of sales and production. The Chinese luxury car market size was valued at USD 195 billion in 2024, and this market is experiencing a surge in demand due to the growing middle class.
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Luxury car demands: Main consumers and their buying habits
Chinese digital consumers are the main target of the luxury car market in China. By leveraging the huge base of Chinese netizens, car brands often organize campaigns and advertisements to launch their newest car models, offer online sales of cars, and raise consumers’ interest.
Chinese consumer car buying behavior has transformed. 30% of luxury car sales in China come from first-time car buyers. This implies that premium cars are becoming more affordable and accessible to consumers. Chinese consumers usually buy and own high-end vehicles because they symbolize status.
However, the definition of “luxury” is shifting in China, as younger tech-focused consumers put more emphasis on advanced technology than brand heritage. The increase in electric vehicles (EVs) has further transformed purchasing behaviors, with EV sales projected to reach 20 million units by 2025. The luxury car market in China performed well up to 2023 due to rising disposable income and changing lifestyle aspirations. Chinese EV cars are offering a new kind of luxury at a competitive and often lower price than traditional prestige.
Chinese brands in the luxury car market
Most luxury car buyers in China usually gravitate towards European brands that are well-established and known for their reputation. Newer brands lack the credibility and legacy. However, there is a shift towards new technology among consumers that could challenge established brands. There are many automakers in China that are developing their own premium cars and EVs to defy well-established international names.
Data source: CNEVPOST, designed by Daxue Consulting, Automaker’s share in China’s Neighborhood Electric Vehicle (NEV) market in 2024
Several Chinese brands have emerged as leaders in the premium segment, each with its own strategy and models. NIO is often known as the pioneer of China’s EV segment; NIO focuses on high-tech EVs with innovations like battery swapping stations and a unique user-centric approach. BYD is one of the world’s largest EV manufacturers and has created sub-brands for luxury segments. For instance, Yangwang, an ultra-premium sub-brand for high-end luxury vehicles that launched in 2023. Hongqi (meaning red flag in Chinese) is China’s oldest luxury car brand, famous for supplying limousines to government officials. But in recent years, Hongqi pivoted to private buyers and international markets while mixing Chinese heritage with modern luxury. These luxury cars are expected to offer comfort and strong performance, whilst EVs deliver acceleration and speed at a lower price point than Western car brands.
Source: Xiaohongshu @586164125, BYD’s Yangwang U9 on display
European luxury automakers are under pressure in China
Germany’s BMW and Mercedes-Benz have suffered a sales slump in the world’s biggest auto market in 2025, with pressure especially coming from both the economy and Chinese electric vehicle companies. Mercedes fell 7% in 2024, and in Q1 2025, shipments to customers in China decreased 10% to 152,800 vehicles. Deliveries of BMW and Minis had similar declines, with a 17.2% drop to 155,195 cars in Q1 2025. Porsche was hit even harder, with a decline of 28% to 56,887 cars in 2024 compared to 2023. During the first three months of 2025, the company only sold 9,471 cars in China. Due to the tense economic conditions and the Chinese market’s focus on value-oriented sales. These declines are due to China’s weaker macroeconomic environment in recent months, which has limited consumer spending, and a shift in consumer preference for value-driven cars.
Domestic rivals are catching up in terms of design and technology. Despite competition from traditional prestige brands, the latest domestic brands of high-end cars are significantly cheaper. The rise of EVs is the main element disrupting the sales of luxury cars. This is because China has the advantage in this market as it produces its own raw battery materials for EVs, making the cost significantly lower. For example, BYD’s Dolphin sales for USD 15,110 in China. But retails at USD 41,342 in the Netherlands, a 174% premium. Low labor costs in China also allow these brands to offer competitive pricing. This makes it more difficult for Western automakers to catch up.
Chinese EVs are redefining “premium”: The impact on Porsche
China has shifted the definition of a high-end car to one that is electric, smart, and affordable. Many of the new Chinese vehicles resemble Western competition, such as the Xiaomi SU7 that mimics Porsche’s Taycan. Comparing the functions, the SU7 rivals the Taycan in braking and power. It also integrates AI to assist with parking, and it sells for half the price of a Taycan. Just in 2024, Xiaomi sold more than 100,000 models of the SU7. Although Porsche’s sales were up everywhere globally, the decline in China was significant enough to drag down its global deliveries in 2024 by 3%. With China’s development in EVs, features like automated driving and remote control have become standard. This situation pressures European brands to rely on function rather than brand names.
Source: Porsche, Porsche Taycan on display
The rise of electric vehicles in China’s luxury car market
Even though the Chinese government included EVs in its five-year economic blueprint in 2001, it wasn’t until 2010 that it started to provide subsidies to grow the industry. At the time, Chinese brands simply couldn’t compete with European, American, and Japanese car makers in quality and prestige. China’s domestic brand BYD is currently leading the global EV market after overtaking US rival Tesla in early 2025. In 2024, it released its Seagull EV, priced a little above USD 10,000 at the Shanghai auto show, and it is now China’s fourth-best-selling EV.
Traditionally, US and European brands were seen as more luxurious and higher quality than domestic auto brands, but Chinese high-end EVs are taking over the market of luxury cars in China. In 2024, China sold 11 million EV units, a 40% increase from the previous year, taking up a large portion of the global 17.1 million EV sales. As of June 2025, 4.4 million EVs had been sold, already representing a 33% increase from 2024. China’s automakers are competing to pack technology and features considered premium into EVs and sell them for as low as USD 20,000, less than half the cost of an average new car in the United States, which would cost around USD 48,000.
Source: Xiaohongshu @95383110221, Longquan Auto Factory
The reinvention of China’s luxury car market
- The luxury car market in China is one of the world’s biggest markets and represents a huge part of its economy.
- Chinese digital consumers are the main target of the luxury car sector. Up to 30% of luxury car sales come from first-time car buyers.
- European luxury cars are struggling in China, especially competing against Chinese EV companies. This is due to domestic rivals catching up in terms of design and technology, with significantly lower pricing.
- Chinese high-end EVs are taking over the market. In 2024, the global EV units sold were 17.1 million, and China sold 11 million units, which is the majority of EVs.
